Injury and Accident Law

The Expansion of Tort Liability in the United States

U.S. tort law is based primarily on common law—in which judicial rules are developed on a case-by-case basis by trial judges—rather than on legislation. Tort liability is assigned using two basic standards: strict liability and negligence. Under strict liability, injurers are held fully liable for their victims’ losses without regard for whether they were actually negligent or intended to harm anyone.1Under a negligence standard, by contrast, injurers are held liable only if they failed to meet a certain standard of care.

According to legal scholars, a number of important developments have increased the scope of liability for torts in the United States.

Early English tort law, the antecedent of U.S. tort law, was chiefly concerned with making injurers pay for the losses of their victims, with little emphasis on fault or negligence.2 That standard was used in the United States until the 19th century, when U.S. common law established negligence as the basis for tort liability. However, strict liability continued to apply in certain cases, such as injuries caused by wild animals kept as pets or damage to crops caused by trespass of domestic animals.3 Some scholars argue that the requirement for plaintiffs to show that defendants had been negligent effectively limited the scope of the U.S. tort system.4

The turn of the 20th century saw public policy increasingly emphasize victim compensation and accident reduction. The enactment of workers’ compensation laws— which established a public insurance system aimed at lowering employers’ payments while making workers’ recovery of damages automatic—played an important role in the evolution of tort law and policy.5 Before workers’ compensation programs, the only remedy that injured workers had was to prove their employers negligent through the tort system. Workers favored legislation instead because they often had been unable to recover damages or had experienced delays or high costs when they had been successful. For their part, employers favored legislation because it limited their liability and made payments predictable.6 That shift away from tort law to a public compensation system led to more thought about how tort liability could be improved or better applied in other types of cases.

By the 1940s, legal scholars had begun to think about two ways in which the tort system could serve the wider goal of enhancing social welfare. First, they saw the economic concept of “cost internalization” as a tool for reducing accident rates: if potential injurers know they will be held liable for accidents, they will take appropriate action to avoid liability. In that view, by awarding damages to compensate victims, tort law would serve as a mechanism to ensure that potential injurers faced the appropriate future costs of their actions.7 Second, some scholars argued that the tort system could provide a kind of accident insurance for victims. They did not focus on the possibility that an expanded liability system could increase carelessness on the part of potential victims, nor did they adopt any of the methods that traditional insurance policies use to deal with that problem.8 Rather, they focused exclusively on the distributional goal of relieving victims of the burden of accident losses and spreading that burden across a broader population.

One area in which those concepts proved appealing in practice was product liability.9 Historically, product liability was dealt with either as a breach of warranty under contract law or as a tort subject to the negligence standard. Under contract law, recovery in such cases was limited to repair and replacement of the product; under tort law, recovery was limited by the difficulty of proving negligence. In the 1960s, the courts moved rapidly toward a standard of strict liability for defective products; in 1964, that standard was accepted and recommended by the American Law Institute in its second Restatement of the Law volume on torts. By the mid-1970s, most states had adopted provisions that were either identical or similar to those in the Restatement.10

In addition, the concept of negligence has undergone significant reinterpretation over time, according to legal scholars. The law now takes into account the fact that manufacturers often have more ability than consumers to avoid accidents; thus, it is more likely to view failure to take inexpensive action as negligence or to attach liability to indirect or partial contribution to an injury.

1. Strict liability—sometimes called “liability without fault”—is based on the breach of an absolute duty to make something safe. See Bryan A. Garner, ed., Black’s Law Dictionary, 7th ed. (St. Paul, Minn.: West Group, 1999), p. 926.

4. See, for example, George L. Priest, “The Modern Expansion of Tort Liability: Its Sources, Its Effects, and Its Reform,” Journal of Economic Perspectives, vol. 5, no. 3 (Summer 1991).

5. The first workers’ compensation law was enacted in 1908 to cover certain federal civilian workers. By 1920, most states had workers’ compensation laws; today, all states and the District of Columbia have their own programs. See Cecili Thompson Williams, Virginia P. Reno, and John F. Burton Jr., Workers’ Compensation: Benefits, Coverage, and Costs, 2001 (Washington, D.C.: National Academy of Social Insurance, July 2003), p. 6.

6. Depending on the state, workers’ compensation requires employers to purchase insurance from either private sources or a public insurance fund, unless they can prove the ability to self-insure. Employers are responsible for benefit payments specified by state statute for on-the-job injuries regardless of who is at fault.

7. From society’s perspective, the optimal level of accident avoidance is the point at which the total cost of additional avoidance is equal to the total additional benefits obtained. However, without cost internalization, an individual firm does not take losses to accident victims into account and thus underprovides accident avoidance, because the costs outweigh the private benefits. Tort liability works by aligning the private benefits of accident avoidance with the social benefits. Markets for products may also lead firms to internalize the costs of accidents when consumers are well informed about the products and the risks of injuries do not fall on third parties.

8. See the discussion in Priest, “The Modern Expansion of Tort Liability,” pp. 31-50. Those scholars also did not note that using the tort system to provide insurance could adversely affect the supply of goods and services by raising companies’ costs.

9. Early attempts to figure out how the tort system could be used to internalize costs in the case of automobile accidents failed because identifying which of the parties should be held liable for such an accident is generally difficult.

10. Strict liability for product defects can be seen as an evolution of negligence and warranty law. Gary T. Schwartz, in “New Products, Old Products, Evolving Law, Retroactive Law,” New York University Law Review, vol. 58, no. 4 (October 1983), pp. 796-852, points to the fundamental “high correlation between product defect and manufacturer negligence, making the issue of negligence not worth the costs and uncertainties of litigation.” Judging defective products under strict liability rather than negligence reduces plaintiffs’ burden of proof. In particular, a plaintiff need not show exactly what happened inside the factory, only that the product is defective.

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